for example, rachel maddow showed that she has a unique ability that has no discernible value in the marketplace. >> what was your other trick that you do? >> this one? >> can you do the arm pit farts? >> this one upsets me. >> it just looks like it hurts. >> i have always -- i have always been impressed by rachel maddow when i watch the show. and now, having tried to host the show myself, i am beyond impressed with what she can do. more like awe, now that i know what she can do, i am bowled over. it is the best new thing for today. that does it for us tonight, the special new year's eve edition with the show.

let's play "hardball." good evening, i'm richard wolffe in for chris matthews. at the 11th hour, just when people were starting to lose hope on the edge of the fiscal cliff the president met with leaders and said he was modestly optimistic about a deal on taxes. meeting this the red room, president obama held firm for tax cuts for families making up to $250,000 per year, and joining me on the north lawn of the white house is kristen welker. kristen, let's listen to what the president said about and up or down vote or what he expects from the senate. >> i had a good and constructive

discussion here with the leadership about this tax hike on the middle-class. i am optimistic that we can reach an agreement that will be passed in both houses. if an agreement is not reached in time between senator reid and senator mcconnell, then i will urge senator reid to bring to the floor and up or down vote for the floor, and i believe a p proposal could pass both houses with majorities as long as the leaders allow it to actually come to a vote. if members of the house or the senate want to vote no, they can. but we should let everybody vote. >> kristen, this up or down vote seems to be be the big news of the day, and isn't this what the white house wanted all along? >> well, it is. it is prp's way of saying, look, vote on his basic proposal, the proposal that will extend the middle-class tax cuts for those making $250,000 or more and extend unemployment benefits and

spending cuts and basic plan that the president is calling for, and something similar has passed through senate so that the white house feels confident what the president is calling for would again pass through the senate and could potentially get through the house. in order for that to happen though, richard, that would involve every single democrat in the house voting for it as well as about 30 republicans, and the question is, could they actually get that many republicans to vote for this package that the president is calling for, but politically what he is doing is essentially saying, this is the plan i'm putting forth and get it through the senate, and if it fails, it will fail in the republican-led house, and essentially having the republicans own that failure and putting them in a box the if you will. and president obama giving lawmakers here two options, one, to come up with their own alternative proposal which is something that senate majority leader harry reid and minority leader mitch mcconnell will

bring to a vote, or put mine to a vote. >> and chrkristen, i did not he about the sequester or the spending cuts that people are talking about in the fiscal cliff, and the debt e creeling that tim geithner said that we would have to raise any day now, and is this the next couple of months in terms of the debate? does the white house have a strategy of dealing with both in the next phase? >> well, they are quite clear that there's probably just too much at this point to put that in this initial package and specifically the debt ceiling, and saying there is no way to address that right now. they know that is the next big hurdle they are going to have to face once they deal with the immediate issue of the tax hikes and spending cuts, so i believe that you are absolutely right. in terms of the strategy f they have one, they have not revealed the details about that quite yet. president obama today, and what i thought was interesting is using the power of the bully pulpit to put pressure on

congress to get this basic deal done that he is calling for, and richard, one of the things that he said at the end of the remarks is that essentially this is not how the american people do business and just to remind you that ordinary folks meet their deadlines and sort out disagreements and the fact that the lawmakers can't do it is boggling to many of them. the president really trying to ramp up public pressure, and this is something that we have seen him do in the past, a tactic that he has taken in the past to try to get the public on his side to put the pressure on the house republicans. richard? >> kristen welker, thank you so much for all of your work at the white house. joined by the grio's joy reid and chicago tribute's clarence page. let's talk about what kristen was just talking about, because i felt that the president was getting impatient. roll the tape. >> outside of washington, nobody seems to understand why this is a repeat pattern over and offagain.

ordinary folks, they do their jobs. they meet deadlines. they sit down and they discuss thi things, and then things happen. if there are disagreements, they sort through the disagreements. the notion that our elected leadership can't do the same thing is mind boggling to them. >> the president seemed to be much more comfortable in the white house briefing room today using the bully pulpit saying enough is enough. >> he did. i thought that he sounded like a man who knows he holds, if not all of the cards, but a lot of them. he has the advantage here, and the polls indicate as with bill clinton in the showdown with newt gingrich and the shutdown of the '90s the public blames the republicans when this happens when over on the house side, you have so many republicans who are so far right and worried about somebody farther right running against them in primaries that john

boehner is having a hard time to get them to agree to his packages like plan b out here. we don't know how much out here in the public things have changed since last week, but it seemed like president obama was saying something that he was planning to say if it came down to the last few days. >> joy, is this the same kind of negotiation we saw in the first term? >> well, richard, one of the things that you didn't see the president do is to offer a new plan and he is laying the debacle at the feet squarely on congress and for the all to see where the dysfunction lies and the president helped himself by making offers that even his base was uncomfortable with, because it is fair to everyone that he is reasonable and trying to make the offers and that the intransigence is on the other side and he is expressing proper proper properlyly the frustration of the american people. >> and now it moves to mitch mcconnell from harry reid.

and we have sound from mitch mcconnell on the house floor and harry reid. >> we had a good discussion with the majority leader with the hopes to come forward as early as sunday to have a recommendation that i can make to my conference and the majority leader can make to his conference. >> i am going to do everything that i can. i'm confident that senator mcconnell will do the same, but everybody, this is whatever we come up with is going to be imperfect and some people aren't going to like it, and some people will like it less, but that is where we are. i feel confident that we have an obligation to do the best we can, and that was made very clear in the white house. we will do the best we can for the caucuses that we have and the country that's waiting for us to make a decision. >> clarence, you have seen this movie before. >> yes. >> it sounds like something is in the works, right? >> well, it sounds like

something is in the works on at least the senate side. on the house side, we don't know about those hard core intransigent intransigents and whether even if the senate does come up with something that the house can agree to go along with it. if, as kristen said, you have to have all of the democrats and about 30 republicans. there is only about six republicans who come from districts who are friendly to democrats, and the rest don't seem to lose any points as far as they are concerned by appearing to be as much of a roadblock as they can, even if it means going over the fiscal cliff. if harry reid and mr. mcconnell can't come up with something, then you have barack obama's proposal and he wants that up or down vote, and one way or another, he is going to try to get people on the record. >> and joy, before it gets to the house republicans, there are plenty of republicans in the senate who could mess this up, right? even if mcconnell and reid have a deal, there is not a guarantee

that there is not a single tea party-backed senator who would stand in the way and say it won't pass me. >> are you giving rand paul the side eye? >> i had him in mind, true. >> and at the end of the day, mitch mcconnell is a better leader of the caucus than boehner is, and mcconnell has controlled the levers of the filibuster process, and the tact that he is meeting with harry reid means there won't be a filibuster and i would be surprised if he could not whip the congress. we have not seen a weaker speaker of the house than john boehner who has essentially thrown up the hands and walked away from the process and the konts tugs constitutional mandate that spending is controlled by the house and not the senate, and he says you guys pass something. they were going to pass it anyway and it is the house that is the problem, and always has been, and this is the same congress behaving this way for two years. >> thank you, joy reid, and

thank you, clarence page. we have a great programming note. sunday, barack obama will be david gregory's guest. i think you can bet that david will ask him all about the fiscal cliff talks. that is on "meet the press." and what became of john boehner because not long ago he was the leader of a powerful leader of the house, but now he can't get his caucus to vote on the much approved plan b, and he is on the sidelines watching the fiscal cliff with the rest of us. this is "hardball." [ mother ] you can't leave the table

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welcome back to "hardball." the president has made clear he wants a deal, but just how will a deal get done? joining me now from the hill is nbc's kelly o'donnell. kelly, i have heard a lot today about the house bill going to one, to the senate and getting amended, and is this some kind of smoke screen for the house republicans or some kind of legislative need to use the

vehicle that has already been passed? >> well, at the risk of this being the eyes glazed over moment, one of the big issues here is that you are are dealing with something that is about essentially taxes, and the constitutional and the laws make it a requirement that that originate in the house of representatives. they have the power of the purse. so one of the challenges beyond the political arguments and the handshake-style deal making we hope will happen over the next few days, there are the mechanics of getting it done and getting it done in time. now, i'm always surprised be by procedure that there is a way to pull a rabbit out of the hat when they have agreement, but there are steps to be taken. will they allow for much debate, or will the house take a look at what the senate has done, and the big power shift here, richa richard, is that we have been so focussed on the house and what speaker boehner could or could not do and the talks were focused between the president and speaker boehner. when he was unable to get enough votes for his idea to have the income tax threshold be at $1

mi million and when that did not work, he insisted that the senate begin to act. politically that is important, because they want to see how many democrats are on board and will all of them join in, and how many senate republicans and especially the more conservative members and members up for re-election in 2014 and how many of them would be prepared to go forward, and then that gives boehner more muscle to try to get enough of his republican members to goal along. in the house, they will need house democrats, and they will need republicans. so there is a mechanical part of this. there is a plit will cal arm wrestling part of this, and there is what will unfold over the next 24 hours in how can they reach a deal. sources in both parties are telling me that part of the sticking point right now is where to set the income threshold and what happens to estate taxes. speaker boehner is saying that the sequester, that big ugly word for automatic cuts makes sure that it is going to stay in and meaning spending cuts which would change the game going

forward because those big spending cuts could lead to jobs and issues that will be probably some of the unforeseen consequences of what happens here. the cut are important, because if the taxes are raised the republicans want to be able to argue that they were able to cut government spending. so while this is an important part, there are many chapters that are going to be happening over the next 24 hours, and we will see if they can get it done. the goal to have something ready to look at by sunday. >> thank you, kelly. my eyes did not glaze over, honestly. this has been a rough couple of weeks for john boehner and hard to believe he is the first casualty of the war. as kelly just said, boehner put forward the plan b only to withdraw it when he could not rustle up enough republican votes, and since then he is more of an observer than a player in the crisis. joining me is rob acosta, and "republic's" john stein. as we just heard from kelly o'donnell, they will be faced

with needing democrats to get this deal through if we do indeed have a deal, and then he has to go back to the caucus and say, re-elect me as speaker. how does he do that? >> well, these are two separate questions, richard. on the first point, boehner has a tough time corralling some of the republican votes to vote for obama's plan. if the president brings the 250 plan to the house floor and it gets through the senate, wow won't see many republicans go after it, but at the same time, boehner is pretty safe when it comes to the speakership. you had guys like tom price or eric canter or other guys if they were making noise against him, there would be huge noise that he is in trouble, be but i don't hear that. i'm on capitol hill everyday and i don't hear that and i believe he is safe because there is not a challenger. >> if boehner is safe in the job, that does not mean to say he is at all relevant here, because they are negotiating past him right now and he is not a factor, is that right? >> yes, it is right, and that is

partly because boehner proved na he could not get it through the house, and now the ball is in mitch mcconnell's corner, andi i can only imagine how upset mitch mcconnell is with boehner, with his inability to get republican support. and all for the eye when he is up for reelection in 2014. but yes, house speaker boehner has shown that he is not entirely, but largely ineffectual, but i agree with robert, there is nobody else there waiting for him to fall. the deputies eric canter and mccarthy were both there when plan b was introduced and failed to pass, so the large successors are not there. >> and paul ryan is another guy to watch. he is the guy who has the real support of the house conservatives and a lot of people who don't love boehner, they love paul ryan and ryan at the final minute of plan b and he was whipping for plan b and came out in support of plan b, and if paul ryan the most high

profile guy who could be a consensus candidate against boehner is not even interested. >> if the president gets it through, doesn't this mean that going forward he has to negotiate with mitch mcconnell and what is the point of talking to the house republicans at this poi point? >> you to include john boehner because he is the speaker of the house, and in control of of the house, but you are making a fair point that the power of the republicans to drive the debate is being under question right now, and we are not sure how boehner can do it moving forward coming to the debt ceiling, and people will look at this experience on the fiscal cliff as an example of how john boehner may or may not drive the discussion. >> and also at the last hour, horse trading gets thrown on to the table, and then they get upset about it. so what is going to be thrown out that will get them upset? >> well, the thing that will get

them piqued is that tax rates. obama is preferring a $250,000 threshold, but in the process of trying to hammer out the deal, it is raised to $400,000 or $500,0 $500,000, and the base is going to be angry about that, and that is offset by satisfaction that some of the entitlement reforms that the president had signed off on earlier such as changing the structure for social security will not likely be in this deal, and obviously, everything remains to be seen, and the estate tax is a big sticking point, because obama wants to see it go up, and the senate republicans will insist that it stay at the current rate. >> thank you, robert costa and sam stein. we will be back in a moment. this is "hardball," the place for politics.

welcome back to hardball. what will a deal look like if there is one? and who is going to wind up giving up more on the tax cuts for wealthy americans?

harry reid insists $250,000 is a threshold, but it may not hold. joining me now is josh green of bloomberg business week. josh, for the markets, for the business community, whether it is $250,000 and i know sit is a big deal for the politicians in washington, but $250,000 or $400,000 or $500,000, is there a big difference? >> no. the ceos have said to raise our taxes and we want a deal, and don't go over the cliff, because it will imperil the recovery and any deal is better than no recovery. >> and the markets have been volatile, and i dont n't know ie can show the chart, but every piece of news whether it is up or down, you can see from the peaks and the troughs here just for a tweet or a facebook post would send the market in a spin. >> well, wall street is expecting washington to do what it does, and at the last minute everybody will come together to stay off disaster and only in the last couple of days has the

possibility entered the mind that we won't. and when mcconnell said we will go over the cliff, you can see the plunge, and then when reid came out and said that it will, then it shot up. and when obama said we are offering a new plan, then the market fell again, and if we don't reach a deal by sunday night, by the time monday markets open, it will be a plunge. >> and the markets perform how people are performing through the year, and the markets are closed down, but the expectat n expectations are high, and they have to stay high, right this is. >> well, that is the danger that you saw the optimistic tone coming out of the discussion and raising the perception they will work it out and make the backlash, the whiplash stronger if we get to sunday and turns out that the talks fall apart and there is not going to be a deal. >> does the market find tor business community find any of the characters reassuring? do they want to hear from one of the people? >> well, i think that they want to hear reassuring things from all of the characters. anybody on wall street and any

ceo does not put a lot of faith in any of them. but the deal discussed does not include the debt limit, so whether we strike one not this weekend, we will have a bigger showdown in two months over the debt ceiling and from the market standpoint and economy standpoint, that is much, much more scarier than anything that happens with the fiscal cliff. >> who gets us through that? anyone left? >> well, your guess is as good as mine. white house people say that obama refuses to negotiate and he believes that the public is behind him, but it is not a compelling argument no the house republica republican, and that is the huge danger that people are focusing on which is the debt limit, because it is not part of the discussions, and that means we will go through it again in 60 or 90 days. >> thank you, josh green from bloomberg business. that is "hardball" for now, and coming up next is "your business" with jj ramberg. that will make it drop over, and over again.

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